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How can an existing business experiencing losses qualify for the EB-5 program?

Under specific conditions, an existing business experiencing losses—referred to as a “troubled business”—may qualify for the EB-5 program. According to United States Citizenship and Immigration Services (USCIS), a troubled business is an enterprise that has existed for at least two years and sustained a minimum net loss of 20% during the 12 to 24-month period before an EB-5 investor files Form I-526, Immigrant Petition by Alien Investor. In such cases, the program’s employment requirement is met when at least 10 jobs are preserved or created in the troubled business.

The vast majority of EB-5 investments are made in new commercial enterprises (NCEs)—businesses that were created or restructured after November 29, 1990. Still, some investors may find it beneficial to invest in troubled businesses. Foreign nationals planning to make an EB-5 investment in a troubled business should keep in mind that the job creation criteria for troubled businesses and NCEs are quite different. Foreign nationals who invest in NCEs are required to create 10 full-time jobs that last for a minimum of two years and are filled by qualifying U.S. workers. In contrast, foreign nationals who invest in troubled businesses must create or preserve 10 jobs. In fact, EB-5 investments made in troubled businesses do not necessarily have to create new job positions.

For instance, suppose that a foreign national chooses to invest in a troubled business that has 10 or more existing employees. In this scenario, the EB-5 capital would not need to create new jobs—the investor only needs to make sure that the 10 existing positions are preserved. However, if the business had nine employees, the investor would have to preserve all the existing jobs and create at least one new position to meet the employment creation requirements. Because each case will vary, EB-5 investors should make sure to retain an experienced immigration attorney.